Raising Capital: Description of the Private Placement Process

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Registration of the sale of a security with the Securities and Exchange Commission (the ?SEC?) is an expensive and time-consuming process. Therefore, an exemption from registration is often critical, especially for start-up and emerging companies. Two of the most important exemptions from the registration requirements of the federal securities laws are the private placement exemption contained in Section 4(2) of the Securities Act of 1933, as amended (the ?Act?) and the safe harbor thereunder provided by Rule 506 of Regulation D. This article discusses the Rule 506 exemption and the procedural steps advisable in attempting to perfect the exemption.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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